Postcomm, the independent regulator for mail services, today published its Competitive Market Review: 2005, which includes the results of a survey of 1,200 postal users.
Speaking at the UK Mail Show in London today (speech, pdf), Postcomm chairman Nigel Stapleton said that, since the market was first opened to limited competition nearly 30 months ago, Royal Mail's rivals had won just over 1.5% of the letters market.
"Customers tell us that this is already encouraging Royal Mail to be more responsive to their needs and offer more choice and innovation in postal services," said Mr Stapleton.
"But the development of a fully competitive market is still at a very early stage. By its own calculations, Royal Mail will still have nearly 90% of the market in 2010," he added.
The review shows that, over the last year:
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Mail volumes were up 1.5%, totalling 20.3 billion items.
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Seven licences have been granted to alternative operators, bringing the total number of Royal Mail competitors to 14.
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Competitors are gaining momentum, handling 106 million end-to-end items - up 86% on last year.
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Access volumes - where Royal Mail takes a letter 'the final mile' -- have risen sharply and are now running at around 90 million items per month.
However, the report also highlighted several important barriers to competition, including customers' lack of awareness of changes in the market and their inertia when it comes to finding out more or even switching. Also highlighted were the difficulties competitors face as a result of Royal Mail's dominance in the market - including the risk of anti-competitive behaviour and the advantages of its huge scale and VAT exemption.
Mr Stapleton said Postcomm will continue to tackle the substantial barriers to competition identified in today's report: "Our job as regulator is to act as a surrogate for the consumer until we see effective competition. In the UK, we know the benefits of competition better than virtually any other country in the world."
The Competitive Market Review also found that:
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Business customers (who represent 80% of the sending market) were optimistic about mail volumes - expecting them to rise over the next five years.
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But only 25% could identify 1 January 2006 as the date of full market opening.
Postcomm is, therefore, working with Postwatch, the consumer watchdog for postal services, to ensure that customers get the information they need to make informed choices about mail services.
Postcomm has invited comments from stakeholders on the Competitive Market Review and future priorities by 31 January 2006. A decision document on specific proposals will be published early next year.
Notes for editors
Postcomm estimates that market shares* for the letters market (items weighing less than 100g and costing less than £1 to post) are:
* Royal Mail 97.2%
* Alternative providers 1.6%
* Direct customer access 1.2%
*Market share by volume, 2005/06, second quarter. For the purpose of calculating market shares, access volumes are assumed to be half mail items for both access users and Royal Mail.
Postcomm's Competitive Market Review 2005 (pdf) is published today. Printed copies are available from Postcomm at 6 Hercules Road, London SE1 7DB. Today's report follows an earlier survey of business customers, 2005 Business Customer Survey, which was published on 29 September and is available on Postcomm's website or by post.
* More on the Competitive Market Review, including full details of the Competitive Market Review consultation.
More information
Chris Webb T 020 7593 2114 M 07779 635881
Suzanne Murray T 020 7593 2164 M 07841 287821
Joseph Bonner T 020 7593 2116 M 7773 329902
